Investment and Funding
While the AI and decarbonisation markets are both growing in size and importance, innovation where the two meet is much less than in other areas where AI is being adopted more readily. Currently, IT, telecommunications and legal are showing the highest rates of AI adoption in the UK.
To achieve the UK’s net zero ambitions, the government has deployed £1 billion to build net zero infrastructures/solutions through the Net Zero Innovation Portfolio, which is spearheaded by the Departments for Energy Security and Net Zero and Science, Innovation and Technology.
The portfolio aims to commercialise low-carbon technologies, systems and business models in power, buildings and industry. Priority areas include:
- Future offshore wind
- Nuclear advanced modular reactors
- Energy storage and flexibility
- Bioenergy
- Hydrogen
- Homes
- Direct air capture and greenhouse gas removal
- Advanced carbon capture, usage and storage
- Industrial fuel switching
- Disruptive technologies
Under ‘disruptive technologies’ the Artificial Intelligence for Decarbonisation Programme has been set up to support and promote the adoption of AI decarbonisation applications. The programme aims to support entrepreneurs in developing technologies, products and processes for energy efficiency, generation and storage.
Some statistics
Our landscape report noted that most AI companies in the UK that are developing decarbonisation solutions are at seed investment stage. Across all sector application areas, the majority of AI innovator companies employ 1-10 employees, and are classified as seed companies, followed by early-stage ventures. In manufacturing, 65% of companies developing AI for the sector were categorised as seed stage, and 26% as early stage venture In agriculture, 72% of companies developing AI for the sector were categorised as seed, and 20% as early stage ventures In energy, 44% of companies developing AI for the sector were categorised as seed, followed by 34% as early stage venture In built environment, 75% of companies developing AI for the sector were categorised as seed stage, and 17% as early stage venture
Innovate UK funding data, accessed via The Data City, indicates that 299 UK-based AI companies have received £331 million in funding to date. Most recipients are categorised as developing solutions for information and communications, while manufacturing ranks third. Although providing significant funding over time, IUK allocated most funding in 2018 (£80.5 million) compared to 2023 (£11.2 million). In the subcategory of ‘GreenTech’ under the AI RTIC, more companies have received IUK grants (376) but of lesser value (total £49 million). Most funding was granted to companies developing cleantech solutions in 2022.
Relevant investment resources
“AI maintained its top position in tech sectors, attracting investor interest. It is clear that despite a decline in financial support, AI’s potential for enhancing efficiency and productivity remains strong for businesses. Last year, we launched the Innovate UK Bridge AI programme, a £100m programme in collaboration with Innovate UK and The Alan Turing Institute to drive the adoption of AI in four untapped industries in the UK: Construction, Transport, Agriculture and Creative industries. The funding targets AI developers, early-stage companies, and mid / late-stage companies in these sectors who want to develop or adopt AI into their businesses. This presents a valuable opportunity for business and the UK tech ecosystem at large.”
“Discover more about sustainable technologies. The need for innovation to tackle our current climate crisis is vital. Considering that European investment in the Carbon and Energy sector has more than doubled since 2021, I think 2024 presents an opportune moment to accelerate this trend and turn planet-saving innovations into reality.”
Read the latest Deeptech investment challenges and opportunities in 2024 review from Digital Catapult’s Miriam Irungu.
“Rebalancing Innovation: Women, AI and Venture Capital in the UK” - from the Alan Turing Institute.